Exemptions from Non-Competition Clauses under UAE Federal Decree-Law No. (33) of 2021

Created on:
November 14, 2023 11:13 AM

Last modified on:
April 13, 2024 3:10 PM

In accordance with the provisions outlined in Article (12) of the Cabinet Resolution No. (1) of 2022, which implements Federal Decree-Law No. (33) of 2021 regarding the Regulation of Labour Relations, certain conditions and circumstances exempt an employee from being subject to the non-competition clause. Here is a comprehensive overview:

1. Essential Skills, Professional Knowledge, or In-Demand Workers:

Employees possessing essential skills, professional expertise, or knowledge in demand may be exempt from the non-competition clause. This exemption aims to acknowledge the significance of certain skills in the labor market.

2. Residency Visa Sponsored by Family:

Workers whose residency visas are sponsored by their families are eligible for exemption from the non-competition clause. This recognizes the unique circumstances of employees whose residency in the UAE is tied to family sponsorship.

3. Golden Visa Holders:

Employees holding a golden visa, a special long-term residency permit, are exempt from the non-competition clause. This reflects the government's recognition of the contributions and significance of such individuals in the country.

4. Professional Categories as per National Labour Market Needs:

The Minister, in alignment with the Cabinet's workers' classification, may determine certain professional categories that are in demand in the national labor market. Workers falling within these categories may be exempt from the non-competition clause, highlighting the flexibility of the law in adapting to the dynamic needs of the labor market.

5. Specific Conditions as per Article (12) of the Decree-Law:

a. Compensation Agreement:

  • The non-competition clause shall not apply if the worker or the new employer pays compensation, with the amount not exceeding three months of the worker’s wage as per the last contract, subject to the previous employer’s written consent.
b. Termination during Probationary Period:
  • Exemption from the non-competition clause is granted if the employment contract is terminated during the probationary period.
c. Professional Categories in Demand:
  • Certain professional categories, as identified by resolution of the Minister, may be exempt from the non-competition clause, aligning with the needs of the national labor market.
  • Exemption from the non-competition clause is extended to workers falling within professional categories considered in demand in the national labor market. The Ministry of Human Resources and Emiratisation (MoHRE) classifies employment into 9 professional levels in accordance with the International Standard Classification of Occupations (ISCO) issued by the International Labour Organization. These levels include:
  • Level 1: Legislators, managers, and business executives
  • Level 2: Professionals in scientific, technical, and human fields
  • Level 3: Technicians in scientific, technical, and humanitarian fields
  • Level 4: Writing professionals
  • Level 5: Service and sales occupations
  • Level 6: Skilled workers in agriculture, fisheries, and animal husbandry
  • Level 7: Craftsmen in construction, mining, and other craftsmen
  • Level 8: Operators and assemblers of machinery and equipment
  • Level 9: Simple professions
  • Labour is considered skilled work if it satisfies the following conditions:
  • The worker must belong to a professional level, falling within the first to fifth levels mentioned above.
  • The worker holds a certificate higher than the secondary certificate or an equivalent certificate, duly attested by the competent authorities.
  • The monthly salary (excluding commission) of the worker is not less than AED 4,000.
  • This detailed classification ensures that workers in professions crucial to the national labor market, meeting specific criteria, are eligible for exemption from the non-competition clause. The provision aligns with the dynamic needs of the UAE workforce, promoting fairness and acknowledging the importance of skilled professionals in various sectors.
In the event of a dispute regarding the non-competition clause, not resolved amicably, the matter shall be referred to the judiciary, with the burden of proving alleged damage lying with the employer. Moreover, parties may agree in writing not to apply the non-competition clause after the termination of the employment contract, providing a degree of flexibility in contractual arrangements.

In conclusion, the UAE Federal Decree-Law and its implementing regulations emphasize the importance of recognizing specific circumstances and skills that warrant exemption from non-competition clauses, promoting fairness and adaptability in the employment landscape. "Nevertheless, this statement is in accordance with the latest Employment Law. It is imperative to assess the judicial interpretation of such provisions in light of recent employment cases."

Article Author:
Mohamed Darwish
Legal Consultant
M.Darwish@darwishadvocates.com

Disclaimer: This article is for informational purposes only and does not constitute legal advice. For personalized legal assistance, please contact a qualified legal professional.